Victory for California Employees

Lately, it seems like courts have all been jumping on the arbitration bandwagon, sending ever-increasing number of employee lawsuits to arbitration.  Courts have allowed employers to force all of their employees to arbitrate any claims against the employers and even allowed employers to use arbitration agreements to prevent their employees from filing class action lawsuits on behalf of wronged employees.

Regardless of employers’ overzealous attempts to restrict employee rights, however, advocates for employees have noted time and again that the law does not allow employers to force employees to arbitrate all of their claims.  In particular, California has a Private Attorneys General Act (“PAGA”) that allows an employee to stand in for the government in seeking to sue an employer for certain penalties for unlawful employment practices.  PAGA specifically permits the employee to sue on behalf of all affected employees.  Employers argue that, since they use arbitration to prevent employees from bringing class actions on behalf of other employees, PAGA actions on behalf of a group of employees are no different.  The law, however, disagrees – PAGA rights are unwaivable, and employee rights advocates fully expect the California Supreme Court to soon shut down employers’ attempts to evade the penalties under PAGA for their wrongdoings.

This week, employees got an additional boost from the California Court of Appeal in San Jose.  The Court of Appeal weighed in with its own two cents, unequivocally holding that PAGA rights could not be restricted through an arbitration agreement.  Essentially, regardless of any arbitration agreement they signed, employees are still permitted to bring PAGA cases in regular court on behalf of all of the affected employees.